Municipal debt relief: Eligibility for out-of-court settlement expanded to debts over €10,000
A new legislative intervention in Greece’s out-of-court debt settlement mechanism now allows debtors owing money to municipalities and local government legal entities to enter the process—even in cases previously considered legally “locked.”
Under the new provision, all types of debts owed to municipalities qualify for inclusion, provided the total outstanding amount exceeds €10,000.
Who Is Eligible Under the New Framework?
According to the amendment, individuals and legal entities may apply to the out-of-court debt settlement mechanism established under Law 4738/2020, regardless of the nature of the debt.
The full amount of the claim—including principal debt, fines, and surcharges—is transferred to the tax administration and treated as a state debt exclusively for the purpose of restructuring through the mechanism.
This change significantly broadens the pool of eligible debtors, offering a single, automated, and standardized restructuring framework for liabilities owed to local authorities.
Boosting Municipal Revenues Through Sustainable Settlements
The reform aims to unblock cases that have remained unresolved for years, generating little to no fiscal return. By enabling long-term, realistic repayment plans, the measure seeks to enhance the collectability of municipal revenues while providing debtors with viable financial relief.
Practical Examples
Self-employed professional with municipal debts totaling €15,000 from public space usage fees and past fines can now apply to the out-of-court mechanism under Law 4738/2020, regardless of whether the debts are overdue.
Small business owing €60,000 to a municipal legal entity from rent arrears and surcharges becomes eligible for inclusion, even if enforcement proceedings have already begun, pursuing a multi-year settlement with potential debt reduction.
Property owner with debts exceeding €10,000 from municipal taxes, property fees (TAP), and related penalties may transfer the full amount to the tax administration and enter the out-of-court settlement process.
